I need some advice regarding son's savings

[aevans1206]

I'd LOVE some of your advice here. I have a measy joint bank account set up for my son where I can deposit those lovely Christmas/birthday gifts he gets in cash from time to time. Thus far, he's got about $150. It's a small amount I know, but one day I'd like to say to him, "Look at the smart thing Mommy did for you with your money!" I don't want to go with a Coverdell or 529 because, as my mother so aptly put it, what if he decides not to go to college? My brother dropped out after three years and I ended up with a full ride scholarship. By the time he is ready for higher education I should hope I'll be out of the sh#@hole I'm in now and can pay for his education out of pocket (or from a Roth IRA I plan to set up in the near future for my husband and myself). Here's what I'm looking at. Any help is dearly appreciated:

1) Can I open a Roth IRA for him (not an education IRA)?

2) Mutual funds: I've read that American Funds American Mutual is a very safe and reliable mutual fund. I don't expect the boy to be a millionaire by the time he's 18, but I would like his money to grow faster than point something of a percent. It also has a start up number of $250--I'll gladly give him $100 to get that started and deposit a small amount along the way, in addition to Christmas/birthday gifts, etc.

Lemme know. I'll be waiting

[disneysteve]

You can't open a Roth for him unless he has earned income. Gifts don't count.

[pretty cheap jewelry]

I have a very similar saving account each for my school age kids. The objective is to deposit these small gifts, not to invest for their future. I have a Educational IRA for that.

These small accounts will be turned over to them gradually as they become teens, earn income (even car washing or lawn cutting at first before employment), learn checking, and credit. (yikes!)

The same process I went through at the same ages and levels.

[aevans1206]

Disneysteve, it appears I've let my slip show. I really don't know what I'm talking about, do I. Thanks for the advice. I just know that coming from where I've been (and I had a great childhood...never had want for anything), I would've loved for my parents to have invested a little something for me OR involved me in more money talk.

[noppenbd]

American Funds are generally low cost funds, however, they can have high purchase costs (5% or so), so make sure you read all the fine print in the prospectus. I would suggest looking into T Rowe Price. They have low minimums and you can set up automatic investing. You could make it a regular taxable brokerage account for now, and then when he starts working, he could open a Roth. You could offer to match any funds he puts in the Roth by transferring out of the brokerage account into his Roth. That would be an excellent way to start a savings habit for him.

[jIM_Ohio]

For my kids education expenses, I am using PRPFX from permanaent funds. Two reasons

1) moderate risk with good growth (in the past)
2) works great in taxable accounts because gold and silver (30% of assets) do not even pay a dividend. No taxes on the growth until I sell.

$1000 minimum to open, additional deposits are $100 minimum.

[Scanner]

YOu probably want to set up a UGMA - uniform gift to minors account. . .you get custodianship until, I think 23, and then the money becomes his. YOu can use any vehicle you feel is right - mutual funds, ETF's., CD's. . .call any broker - we use Schwab but Scottrade is good also.

Or just go directly through the mutual fund co.